Following a divorce or separation, parents need to determine who will claim their children on their taxes. As the Internal Revenue Service (IRS) explains, only one parent can claim a child on their taxes. If both parents try to claim a child, it will cause problems. In this article, our Texas child custody lawyers explain the most important things separated parents need to know about the rules for who can claim a child.
The Parent Who Has Primary Physical Custody Has the Right to Claim the Child
Under IRS rules, the parent who has primary custody of a child has the first right to claim that child on their tax return. For example, if your child spends 75 percent of their time with you and 25 percent of their time with the other parent, then you have the right to claim your child on your taxes. When primary custody is clear, there is little dispute over who has the right to claim the child.
Tiebreaker: Parent with Higher Income Should Claim the Child
In some cases, parents have a genuine 50-50 custody arrangement in place. The IRS has developed a basic tiebreaker rule to deal with this: The parent who has a higher income for the tax year in question should claim the child. Often, the parent with the higher income will gain a larger tax benefit from claiming a child. This can free up some extra money in tax savings, which can be used to support the family as a whole.
It May Be Financially Advantageous to Allow the Non-Custodial Parent to Claim a Child
To be clear, a parent with primary custody does not necessarily have to claim their child on their taxes. In some cases, it will be advantageous for both parties to have the non-custodial parent claim the kids. For example, if the custodial parent has relatively little taxable income — at least in comparison to the non-custodial parent — they may not be able to fully utilize the benefits of child tax deduction and child tax credits.
In this situation, both parents can attach Form 8332 to their tax return. By doing so, they will be able to seamlessly allow the non-custodial parent to claim the child. Transferring the right to claim a child will sometimes free up some additional tax savings — which can be split between the parties or used to directly support the child. You do not want to leave money on the table: Make sure you and your former spouse/partner are using tax child deductions/credits in the most effective manner.
Get Help from Our Texas Family Lawyers Today
At Orsinger, Nelson, Downing and Anderson, LLP, our Texas family law attorneys are committed to protecting the financial interests of our clients. Our lawyers are consistently ranked among the best divorce and custody attorneys in the state. To arrange a strictly confidential initial consultation, please contact our legal team at (214) 273-2400. With offices in Dallas, Frisco, Fort Worth, and San Antonio, our family law practice serves clients throughout Texas.